Supreme Court orders Jaypee to deposit Rs 2,000 crore; asks for interim plan in 45 days

Supreme Court on Monday directed Jaypee Associates, the parent firm of its real estate firm Jaypee Infratech, to deposit Rs 2,000 crore by 27 October with its registry.
 
The apex court also asked the NCLT-appointed interim resolution professional (IRP) to take over the management of Jaypee Infratech and submit a plan to protect the interests of homebuyers and creditors within 45 days.

Supreme Court has also barred the Managing Director and Directors of Jaypee Infratech and Jaypee Associates from travelling abroad without prior permission of the court.

A bench headed by Chief Justice of India (CJI) Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud asked the IRP to submit a resolution plan within 45 days to the court, which shall indicate the protection of interests of homebuyers and the creditors.

The bench also appointed an amicus, who would participate in the meetings held by the IRP to espouse and protect the cause of homebuyers.

"We are not concerned about the companies, but only about the interest of homebuyers who are middle class," said Misra. The apex court described the turmoil faced by flat buyers of Jaypee Infratech a "human problem of high magnitude".

However, Attorney General K.K. Venugopal had suggested to the court that the IRP be given more time to formulate a plan so that everybody's interest is taken care of.

The top court has allowed Jaypee associates to raise Rs 2,000 crore by liquidating some land aassets and properties with the prior approval of the IRP appointed by NCLT.

On September 4, the Supreme Court had stayed the insolvency proceedings against Jaypee Infratech after a PIL filed by a homebuyer sought stay on the NCLT order. The plea said the homebuyers, being unsecured creditors, will get nothing out of the insolvency proceedings as the dues of financial institutions, which are secured creditors, would be cleared first.

The IBC code allows proceeds from the liquidation of assets to distributed to secured lenders first.

It was alleged by senior advocate Ajit Sinha, appearing for petitioner Chitra Sharma, that around Rs 25,000 crore worth of money of flat buyers and others has been at stake and the insolvency proceedings were initiated "for a petty sum of Rs 500 crore".

IDBI Bank, the largest creditor of Jaypee Infratech Ltd and the leader of the consortium of lenders to the Jaypee Group, had moved Supreme Court to restore the insolvency proceedings against the real estate company.

Around 32,000 homebuyers had been left in the lurch after the Allahabad bench of the National Company Law Tribunal (NCLT) admitted IDBI's plea for initiating insolvency proceedings against Jaypee Infratech for defaulting on a Rs 526-crore loan.

NCLT had appointed a chartered accountant Anuj Jain who was asked to prepare a resolution plan and submit it to NCLT. The plan will then have to be approved by 75 per cent financial creditors (by value) in the committee.  

Jaypee Infratech Ltd was among the 12 accounts identified by RBI for insolvency proceedings last month.